Why do Linux care about upper and lowercase in file names?

Answer 1

It isn't so much that Linux cares about them as much as it supports them. The command line tools in Windows are modeled after MS-DOS, and thus cannot distinguish between upper- and lowercase letters. You cannot have two files that have the same name, but different capitalizations for this reason in Windows.

Linux, however, recognizes the differences between upper- and lowercase letters. There are times when you might want to have different capitalizations but otherwise identical filenames. So file.txt, File.txt, and FILE.TXT are all considered separate file names.